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AP Twitter hacking shakes up stocks

Agency's tweet on 'White House attack' spooks investors

Bloomberg, AP

The Associated Press, one of the world’s largest news agencies, said a hacking attack Tuesday caused it to send out an erroneous Twitter post that sent markets down 1 percent in a matter of seconds.

The false information about explosions at the White House and President Barack Obama being injured came after repeated attempts by hackers to gain access to AP reporters’ passwords, the news agency said in a report. It said it had suspended its account and would work to fix the vulnerability.

The Dow Jones industrial average and the Standard & Poor’s 500 Index each fell about 1 percent before rebounding. A separate Twitter account operated by the AP’s corporate communications team followed up minutes later with its own message: “That is a bogus @AP tweet.”

The news agency is the latest victim in a series of hacking cases against news outlets, including The New York Times and the Wall Street Journal. The errant tweet spooked investors eight days after two explosions struck the Boston Marathon, killing three people and wounding more than 200.

The false tweet spotlights the increasingly close ties between social media and financial markets. The AP’s main Twitter account, @AP, had over 1.9 million followers before the hacking.

The incident shows the risk of social media, said Cathy Baron Tamraz, CEO of Berkshire Hathaway Inc.’s Business Wire, who called it an “object lesson” in why social media isn’t a substitute for press releases.

“I’ve got over 100 technologists in my shop,” said Tamraz, whose company distributes news releases for corporate clients. “What they spend their time doing is figuring out what the bad guys want to do and preventing them from doing it. That’s the kind of thing I don’t think these social sites were even set up to do. That’s not their core competency.”

The Dow closed up 152.29 points at 14,719.46 while the S&P 500 ended 16.28 points higher at 1,578.78. The Nasdaq composite rose 35.78 points, or 1 percent, to 3,269.33.

Earlier in Europe, hopes that the European Central Bank will cut interest rates next month to support a fading economy fueled a rally in stock markets. Germany’s DAX rose 2.4 percent to close at 7,658.21 and the CAC-40 in France surged 3.6 percent to 3,783.05. The FTSE 100 index of leading British shares rose 2 percent to 6,406.12.

Yields on benchmark 10-year U.S. Treasury notes dropped about 0.06 percentage point to a low for the year of 1.64 percent immediately after the bogus tweet as investors sought refuge in the world’s safest assets. The dollar weakened to about ¥98.60 before recovering to ¥99.27 after the report was discredited.

Ed Donovan, a spokesman for the Secret Service, which provides protection for the president, said the agency is aware of the incident, will be monitoring it and will take any appropriate followup steps. He declined to give specifics.

Twitter accounts are vulnerable to hacking partly because the service lacks a more sophisticated authentication system, according to Wade Williamson, a senior security analyst with Palo Alto Networks Inc.

“The attack does not appear to be particularly technically sophisticated and is likely an example of a traditional account hijacking in which a hacker stole the AP account administrator’s password,” he said in an interview.

The AP reported that the hacking was preceded by a “phishing attempt” on its computer network, a common hacking technique that lures users into divulging user name and password information by setting up a fake log-in screen.

The hacking “came less than an hour after some of us received an impressively disguised phishing email,” Mike Baker, a reporter for the AP based in Olympia, Washington, said on his Twitter account. “Whatever the purpose of this attack was, it seems to have been pretty self-contained. The benefit from the attackers’ view has already happened.”